In July last year, Chinese authorities decided to loosen regulation of the Chinese currency making it fully convertible outside country borders. In conjunction with this, China also decided to "internationalise" its own currency, making it possible to use renminbi for many kinds of cross-border transactions – previously all these transactions had to be carried out in foreign currencies, such as US dollars or euro.
With authorisation recently secured from the People's Bank of China (the Chinese central bank), and upgrades to its IT system, SEB's Shanghai office can provide trade-related cross-border payments in renminbi for companies registered in China.
"By being an early mover with this product, we hope to be able to keep the clients' flows when they choose to do their China trade in renminbi within the bank, doing their cross-border payments from the Shanghai office and their foreign exchange transactions and off-shore renminbi cash management from our offices outside China. We are a one-stop shop," Fredrik Hähnel, head of SEB in Shanghai, says.
He adds the combination of offshore and on-shore renmimbi services can be very powerful in attracting new clients – and boosting business with existing ones.
The added services support SEB in Shanghai's focus on building its cash management portfolio in China. Last year, the bank became a member of the national clearing system (CNAPS), and this year is working hard to prepare for an upgrade and automation of the RMB payment solution with the help of specialists in Sweden.
"The office is really committed to developing the cash management offering so that we can become more of a house bank for mid-corps and smaller large corporate clients in China," Hähnel adds.